Microsoft to Immersion: You owe us for the Sony settlement

Microsoft is suing Immersion for breach of contract only months after …

Immersion has been in the news in recent years largely on account of their legal beatdown of Sony. The haptics feedback company took both Microsoft and Sony to court over the presence of haptic feedback technology in their controllers back in 2002, and Microsoft settled for $26 million and a few surprises (more on that in a minute). Sony, on the other hand, defended their PlayStation 2 DualShock controller, but once the smoke and appeals cleared, Sony was on the hook for more than $90 million.

When Sony claimed that the lack of haptic feedback in the PS3 controller was due to "rumble" being "last-gen," we pointed to the lawsuit as evidence that bad blood was ultimately fueling the decision. Curiously, once the settlement was in place, Sony said that they "look forward to exploring with Immersion exciting new ways to bring the largest and best range of gameplay experiences to our customers." As it turns out, some gamers like rumble, and it looks like rumble may be returning to the PS3.

The bad blood may have been cleared up between Sony and Immersion, but there's a new fight brewing between Microsoft and Immersion. The company is suing Immersion for breach of contract, having failed to pay proper consideration to Microsoft for a very interesting agreement between the two parties.

"We entered into a binding licensing agreement with Immersion and are seeking to have that agreement honored," said Microsoft associate general counsel Steve Aeschbacher in a statement. "Our request to the court is that all companies and industry partners should play by the same rules and that the binding agreement we signed with Immersion be honored."

Just what hasn't been honored? The complaint details the Sublicense Agreement (SLA) that Microsoft and Immersion entered into in 2003, following the settlement between the two parties. According to the complaint, the SLA entitles Microsoft to a minimum $15 million payment as a result of Immersion's settlement with Sony. Microsoft and Immersion apparently agreed to share the bounty that would stem from a court battle with Sony, and Microsoft says they have yet to be paid. In fact, Microsoft had a stepped arrangement which provided that additional compensation should be paid to the company if the total settlement amount surpassed $100 million, which Microsoft believes it has. How can that be true if the Sony settlement was for just $90 million?

Microsoft accuses Immersion of having failed to promptly disclose the full terms of their settlement with Sony, and they also accuses the company of "actively attempting to characterize its agreements with Sony as something other that [sic] what they are—a settlement." The accusation is that Immersion categorized part of the settlement as "licensing" of new technology. Microsoft sees any licensing stemming from the suit as being part of the settlement proper, and they want their cut.

Thus Microsoft says that in addition to the original $15 million "base obligation" owed as a result of the SLA, the agreement also entitles Microsoft to compensation for an additional amount to be determined at trial.

Ken Fisher / Ken is the founder & Editor-in-Chief of Ars Technica. A veteran of the IT industry and a scholar of antiquity, Ken studies the emergence of intellectual property regimes and their effects on culture and innovation.